The failure of some countries within the West African Monetary Zone to meet up with the macroeconomic convergence criteria is currently threatening the take-off of the single currency regime for the sub region.
The development was confirmed on Thursday during the 37th meeting of the Committee of Governors of Central Banks of the West Africa Monetary Zone, which held at the headquarters of the Central Bank of Nigeria in Abuja.
The three primary criteria being used are a budget deficit of not more than three per cent; average annual inflation of less than 10 per cent with a long-term goal of not more than five per cent by 2019; and gross reserves that could finance at least three months of imports.
The three secondary convergence criteria that have been adopted by ECOWAS are public debt/Gross Domestic Product of not more than 70 per cent; central bank financing of budget deficit should not be more than 10 per cent of previous year’s tax revenue; and nominal exchange rate variation of plus or minus 10 per cent.
Presenting a progress report at the opening session of the meeting, the Director General, West Africa Monetary Institute, Dr Ngozi Egbuna, explained that as of December 2017, none of the countries met all the four criteria.
She, however, said the average performance of the member countries of the zone improved during the year under review.
For instance, Egbuna stated that The Gambia, Guinea and Nigeria attained three criteria each.
She said The Gambia missed the fiscal deficit criterion; Guinea slipped on the gross external reserves, while Nigeria missed inflation criteria.
Addressing delegates at the meeting, the Governor, CBN, Mr Godwin Emefiele, cautioned member countries not to let the desire for a common currency blind them to the adverse and contagion factors associated with a unified monetary environment.
He said, “Our desire for greater economic prosperity for our people through a common monetary union must not vitiate our awareness of the potential adverse and contagion factors associated with unified monetary area and common currency.
“The unfolding trade war between the United States, China and the West portends both opportunities and challenges for our region’s economy, depending on how we approach it individually as nations.
“Nonetheless, while the shocks to individual economies might vary in magnitude and intensity, it might yet be an opportunity for us to look inward and strategize on how best to fill the trade gap that will ensue.”
Emefiele added, “Now is the time to create the West African Monetary Zone Commission to drive our common interests and aspirations.
“We must intensify our level of cooperation and collaboration through strong bonds to work as a unit within the ECOWAS monetary union programme to achieve our shared objective.”